TORONTO, ON – Global Alumina Corporation (TSX: GLA.U) announced today that it has entered into a subscription agreement to place US$ 100 million through the United Arab Emirates based private equity boutique SW Source Capital. Emirates International Investment Company LLC, subject to regulatory and shareholder approvals, will purchase 25 million common shares of Global Alumina for an aggregate purchase price of US$ 50 million and a convertible debenture (the “Debenture”) in the principal amount of US$ 50 million.
“This US$ 100 million subscription agreement arranged by Dubai-based private equity house SW Source Capital is another significant step forward toward completion of the equity financing required to facilitate the development and construction of Global Alumina’s 2.8 million tonne per annum alumina refinery. The proceeds from this transaction will considerably enhance our ability to maintain our current construction schedule, and lift Global Alumina’s aggregate subscribed equity to US$ 438 million toward our objective of US$ 700 million. We look forward to the investor being an active strategic partner as we continue to aggressively execute our business plan and achieve our corporate and financial milestones,” commented Bruce Wrobel, Chairman and Chief Executive Officer of Global Alumina.
An SW Source Capital spokesman said, “We are very happy to be involved in the placement of this strategic project with our client where we believe that alumina has, and is projected to have very strong global demand going forward. We also have great comfort that Bruce Wrobel and his team have a formidable track record and a vision that we believe will guide Global Alumina through to the production phase and beyond.”
This investment arranged by SW Source Capital is conditional on the closing of the first US$20 million of the Dubai Aluminium Company Limited (“Dubal”) approximately US$ 200 million investment announced last week, and brings the total value of subscription agreements secured by Global Alumina to US$ 300 million. The proposed US$ 200 million investment by Dubal will result in Dubal owning 25% of the issued and outstanding common shares of Global Alumina on a fully-diluted basis. Approximately $180 million of the Dubal investment is contingent on satisfaction of certain conditions, including completion of the Project Equity Raise (as defined below), as further described in a press release issued by Global Alumina on August 11, 2005.
The principal terms of the subscription agreement are:
- The investor will subscribe for 25 million common shares at a price of US$ 2.00 per share for an aggregate price of US$ 50 million.
- The Debenture will have a principal amount of US$ 50 million and a term of five years. The Debenture will bear interest at the rate of 10% per annum payable on June 30 and December 31 of each year.
- The Debenture will be convertible for common shares exclusively during the 12 month period following receipt by Global Alumina of aggregate gross proceeds equal to US$ 700 million as a consequence of the issuance by Global Alumina of equity securities (the “Project Equity Raise”). The Project Equity Raise includes the US$ 138 million of equity capital raised by Global Alumina to date, the proposed US$ 200 million investment by Dubal (as referred to above) and this US$ 50 million common share subscription and US$ 50 million Debenture.
- The Debenture is convertible for common shares, in whole but not in part, at a conversion price of US$ 2.50 per Share (subject to adjustment for dilution) for a total of 20 million common shares.
- The subscription agreement gives the investor a right to nominate a director of Global Alumina at the next general meeting of Global Alumina’s shareholders for so long as it holds not less than 10% of the outstanding shares of Global Alumina (on a fully diluted basis).
The closing of the transaction referred to above is subject to certain conditions, including regulatory approval of the transaction as a whole, shareholder approval of the conversion terms of the Debenture and closing of Dubal’s initial US$ 20 million investment in Global Alumina. The Toronto Stock Exchange (the “TSX”) requires shareholder approval of the terms of the Debenture because, when combined with the 25 million common shares to be issued to the investor, the investor will have or have the contingent right to acquire in excess of 25% of the current issued and outstanding common shares of Global Alumina. Assuming the conversion of the Debenture, the investor would acquire 45 million common shares, which represent 37.64% of the current issued and outstanding common shares of Global Alumina. Immediately following the closing of the transaction, after giving effect to the investor’s common share subscription and Dubal’s initial 10 million common share subscription, the investor will hold 25 million common shares, representing 16.18% of the then issued and outstanding common shares. The TSX will allow Global Alumina to obtain shareholder approval of the conversion terms of the Debenture by providing the TSX with written evidence that holders of more than 50% of the voting securities of Global Alumina are familiar with the proposed terms and are in favor of such terms. Copies of the materials soliciting shareholder approval will be made available under Global Alumina’s profile at www.sedar.com at such time as the materials are mailed to those shareholders.